A split in the ranks of the financial PR industry has emerged in the UK. The Financial Services Authority, the body recently formed to act as London's watchdog, has called for comments on a proposed code of marketing conduct. Among those to respond were the Institute of Public Relation's City and Financial Group. Having failed to gain a consensus among its members, it was unable to press for specific regulation of financial PR practitioners, and had to be content with opening 'the door for further discussion on more specific regulation of the business.'
This door may have to remain ajar for some time, judging by the way the industry is polarized on the issue. Basically, those against regulation argue that the existing rules in the London Stock Exchange's Yellow Book and Price Sensitivity Guide, the Takeover Panel Blue Book, plus the laws of the land, provide an adequate framework for financial PR, and that the compliance costs of increased regulation would force smaller agencies out of business, and make all agency services more expensive.
Those in favor argue that the lack of specific regulation for the financial PR industry means that when price sensitive information is leaked, the finger will inevitably be pointed at PR practitioners.
As part of this consultation process, PR Week chaired a debate last week between senior financial PR practitioners, London city advisers, and the financial press. The delegates remained divided on the issue of regulation, although the weight of opinion leant towards the 'why fix what ain't broke' school. However, the IPR has now agreed to look at setting up a voluntary cross-industry financial code, which would provide a framework for proper training and examinations, as well as staving off any draconian measures by the Government by proving that the industry is trying to put its own house in order.
This need to appear proactive is made all the more urgent by the possibility of future Government intervention driven by the rise in cross-border investment in Europe. The introduction of the Euro and the creation of links such as that between the London Stock Exchange and Deutsche Borse, mean that the industry will soon have to look at how any regulation would dovetail with that of the other 30 European exchanges. With a trend towards pan-European financial analysis, and the potential for the Continent to evolve into something resembling a single market, there is a need for the financial PR industry to reach some kind of consensus on this issue - and fast.